SASHA PFEIFFER, HOST:

Meta is planning a second round of layoffs. It is the parent company of Facebook, Instagram and WhatsApp. And yesterday another 10,000 job cuts were announced. This follows 11,000 layoffs at Meta last November. CEO Mark Zuckerberg said 2023 will be Meta’s “year of efficiency.” He also says that he will be, according to him, stronger and more agile. We were joined by Wall Street Journal tech reporter Sam Schechner. Sam, thanks for coming.

SAM SCHECHNER: Nice to be here.

PFEIFFER: There are a lot of layoffs, but I want to make sure we put this in the overall context of how big Meta is. So tell us, how many employees does he have now? How much will be left when the layoffs are over?

SHEKHNER: Well, those are good questions. We know the numerator. We don’t necessarily know the denominator. At the end of the year, Meta had about 86,000 employees. The majority of those laid off — 11,000 last fall — were still receiving wages, the company said. So if we go from there and add it all together – you know, 21,000 people laid off – that could be almost a quarter of Meta’s workforce.

PFEIFFER: That’s a lot. And how important do you think it is in terms of the impact it has on the company?

SCHECHNER: Well, I mean, you can see it by the fact that people inside the company are worried. You know, Mark Zuckerberg sends a message to the staff and it’s 2200 words. And, you know, there are some of my mistakes in this. But there is also his vision for a smaller, more agile company that he is trying to communicate. And actually, at some points in this memorandum, he talks about how he thinks this will happen, and makes everything work more efficiently, more efficiently than before.

PFEIFFER: During the pandemic, Meta and many other tech companies have been hiring crazy. So do these layoffs essentially bring the Meta back to pre-pandemic levels, or do you see it go deeper? Any ideas?

SCHECHNER: Well, we’ll have to see where he ends up landing. But, you know, Mark Zuckerberg, what struck me about that memo is that he said that this is something that he thinks will continue for many years. This is the new economic reality. And I think that’s a real change in tone from the go-go days – at least in regards to tech company revenues during the pandemic, as you said when Meta was counting – and many tech companies were counting – on a fundamental change in the way people work. . And it really didn’t work. And now…

PFEIFFER: It may have been temporary.

SHEKHNER: It appears to have been, at least in some way, temporary. Even Meta has changed its stance on remote work to some extent and encouraged people to return to the office.

PFEIFFER: Interesting. You know, Zuckerberg said that things like layoffs were caused by things like rising interest rates, geopolitical tensions, new rules. Do you believe that, Sam, from your report? Do you believe in these reasons?

SHEKHNER: I think that this combination of factors certainly plays a role. And I think – you mentioned the rules. You know that Meta must comply with a growing number of new rules and regulations. You know, there are new rules coming into force in the European Union that will require major changes to how companies operate. There are changes they had to make because, as you know, Apple took privacy steps to turn off some of the data they were using, which also cut their income. So I think all of these things together are factors.

PFEIFFER: Yes, about these privacy settings – Apple has made a change that limits the amount of data that apps can collect. This appears to have hit Meta’s bottom line hard — about $10 billion in lost profits last year. So has Apple really hurt Meta a lot by tweaking the iPhone’s privacy settings?

SCHECHNER: I mean, Meta, as you know, went through a whole internal process to try and deal with these changes. This was a major problem for their advertising business. In later quarters, they said they started to see a path to recovery because they are using AI to make up for some of that lost data to infer some targeting information that they can no longer collect. phone numbers of their users. You know, though, their income is down from last year in their last report.

PFEIFER: Yes. One last general question, maybe 20 seconds or so – do you assume that other tech companies within the company are now facing the same type of financial pressure Meta is talking about?

SCHECHNER: We’ve seen layoffs like this sweep through Silicon Valley. And I think, you know, we’ve seen one round in many big companies. Can we see more? I think there is definitely investor pressure, and the new one is you know, the era of free money for these Big Tech companies is over.

PFEIFFER: This is Sam Schechner. He covers technology for The Wall Street Journal. Thank you

SHEKHNER: Nice to be here.

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